Obviously take this with a grain of salt (or liquor or whatever) but you can build, or re-build, at LOT of house for $175K.  

Some things are so costly to repair that literally tearing the house down and rebuilding it would be easier.

Insurance companies are increasing rates (cost to insure $100 of property value) AND replacement cost values (cost per sq/ft to rebuild).  

Rebuilding a duplex would not be allowed.

I am looking to build from ground up or purchase a property that needs complete rehab or demo and rebuild in areas of downtown Indianapolis where we are seeing an enormous amount of redevelopment or new development. 

Another one.. we got a house from auction.com for dirt cheap ($5K), our contractor told us the house was just straight up garbage,  it'd be easier to just tear it and and rebuild.. we resold it for $10K, but it was scary at the time! 

Also, the lower units may be below the area's base flood elevation, which would prohibit you from rebuilding them unless you somehow raise the house.

May be wise to work on rebuilding your credit until you can get traditional financing.

For every $5 spent rehabbing or rebuilding you get $1 off the nuisance and demo liens.

Sure, he could be hiding something, but he hasn't hid that he declared bankruptcy and had to rebuild his wealth from scratch.